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QUESTION
(Operating leverage) In light of a sales agreement that Napa Valley Winery (see description in Problem 15-2A) just signed with a national chain of
(Operating leverage) In light of a sales agreement that Napa Valley Winery (see description in Problem 15-2A) just signed with a national chain of health food restaurants, NVWs CFO Jackie Cheng is estimating that NVWs sales in the next year will be 50,000 bottles at $30 per bottle. If variable costs are expected to be 70 percent of sales, what is NVWs expected degree of operating leverage?
